Mining giant Rio Tinto will buy Arcadium Lithium for $6.7 billion

Rio Tinto will buy Arcadium Lithium in an all-cash deal that values ​​the target company at $6.7 billion, as one of the world’s biggest miners grows its position as a global leader in commodities for the energy transition.

Rio Tinto and Arcadium Lithium plc on Wednesday announced a definitive agreement under which Rio Tinto will acquire Arcadium in an all-cash transaction for $5.85 per share.

The transaction price represents a 90% premium to Arcadium’s closing price of $3.08 per share on October 4, 2024, and values ​​Arcadium’s diluted equity at approximately $6.7 billion.

With the deal, Rio Tinto will expand its portfolio with the world-class lithium business, complementary to Arcadium, “establishing a global leader in energy transition commodities”, from aluminum and copper to high-grade iron ore and lithium, said Rio Tinto.

Earlier this week, the mining giant confirmed it had made an approach to Arcadium Lithium about a potential acquisition.

“The approach is not binding and there is no certainty that any transaction will be agreed or proceed,” Rio Tinto said on Monday.

News of the definitive agreement came Wednesday, with the deal expected to close in mid-2025.

The transaction was unanimously approved by the boards of directors of Rio Tinto and Arcadium Lithium.

However, there are key conditions to closing, including the approval of Arcadium Lithium shareholders and the Royal Court of Jersey, as the transaction will be implemented through a Jersey scheme of arrangement, plus the receipt of customary regulatory approvals and other closing conditions.

Rio Tinto says the timing of the deal is right because it is confident in the long-term outlook for lithium, with more than 10% compound annual growth rate in lithium demand expected until 2040, leading to a supply shortage.

“With lithium spot prices down more than 80% from peak prices, this countercyclical acquisition comes at a time of substantial long-term market and portfolio growth, supported by an attractive market structure and established jurisdictions” , the mining giant said.

By Tsvetana Paraskova for Oilprice.com

More top reads from Oilprice.com